The buying vs Leasing opinion thread

[shooter69]

As many have said, depends how you see your vehicle.

Some people enjoy driving and take pleasure from driving a "driver's" car. (I'm excluding those that buy a nice car to show off. That's just dumb). Those will probably get a new car every 3 years.

Then you get those that are terrified of driving something out of warranty. Those also buy a new car every 3 years.

Then you get those that see their vehicle as tool to get from a to b. They will be something cheap and keep it for a decade.

Different strokes, for different folks.

This is 100% true. And this is why I wonder why most south africans only see Leasing as a "Live beyond you means" thing.

 

[hj2k_x]

What lease options are out there these days? When last I checked, they were so expensive, it wasn't even worth considering.

 

[Splinter]

I see the expense the same way I see renting my flat. Everything else I do is cash. Just not my car or flat.

but when you are 45 - you might still be leasing a car, not owning your house and then wonder how your mates are able to own that 4 million rand house and the 4x4 and you are still renting a flat or townhouse and leasing a 3 series...

Perhaps speak to some Finance Advisor/ a mate in finance / or simply use Excel to get another perspective - you need to see the maths and rand and cents on paper over 5 - 10 years to make a decision using your head

This is the thing - you are simply consuming, but not accumulating (wealth). Based on what you said in your OP, it does not sound like you are investing or saving for retirement much (or at all).

You need to forget about the "new" car, and rather look to buy a house or flat. Otherwise you are looking at working until you die; all the time paying someone else's bond off. Right now you think you are young and able to make changes for the future, in the future. Unless you luck into some money or a high paying job you are going to be very unhappy with yourself in 10 years from now.

Trust me - time flies. Which is actually a bonus when it comes to investing in a property. A bond repayment that seems massive now will look like small change in 10 years. Trying to buy a property for the first time in 10 years will make your bum squeak.

 

[sox63]

I totally agree with the OP. Cars for me are to be enjoyed and not owned. It makes far better sense for me personally to lease it and the difference I save in monthly instalments. Even in a simple savings account would do. Or something riskier like a satrix 40 type of product.

 

[A3@MBB]

This is the thing - you are simply consuming, but not accumulating (wealth). Based on what you said in your OP, it does not sound like you are investing or saving for retirement much (or at all).

You need to forget about the "new" car, and rather look to buy a house or flat. Otherwise you are looking at working until you die; all the time paying someone else's bond off. Right now you think you are young and able to make changes for the future, in the future. Unless you luck into some money or a high paying job you are going to be very unhappy with yourself in 10 years from now.

Trust me - time flies. Which is actually a bonus when it comes to investing in a property. A bond repayment that seems massive now will look like small change in 10 years. Trying to buy a property for the first time in 10 years will make your bum squeak.

+1

As someone mentioned, car lease in SA is does not make any sense since it is nothing more than buying with a residual and buy-back option if you look at the monthly R spend.

 

[Brawler]

Most leasing deals I have seen also require large deposit. So not only do you never own a vehicle and constantly paying huge numbers but you also need to save that 40k + odd for a deposit every 3 years.

It could work for some people but for a youngster renting a flat it doesn't sound wise at all.

 

[hj2k_x]

I totally agree with the OP. Cars for me are to be enjoyed and not owned. It makes far better sense for me personally to lease it and the difference I save in monthly instalments. Even in a simple savings account would do. Or something riskier like a satrix 40 type of product.

What kind of a leasing deal are you getting?

 

[sox63]

What kind of a leasing deal are you getting?

Normal GFV deal. Although I didn't go for a car I wouldn't normally afford through a straight purchase. Just one I could afford to buy but just lower instalments by a fair bit. And save the odd 2k per month

 

[phiber]

You can get some really good deals on GFV, and these are guaranteed minimums, so you can often get more for the car. Usually there is a specific model being offered at a certain rate, as they need to get some units off the floor so if you aren't too fused about what you buy and shop smartly you can do really well in one of these deals.

That VW link you posted doesnt seem to work for me... Whats the monthly on the polo?

 

[hj2k_x]

Normal GFV deal. Although I didn't go for a car I wouldn't normally afford through a straight purchase. Just one I could afford to buy but just lower instalments by a fair bit. And save the odd 2k per month

Why don't I know what GFV is??

 

[gimpex]

Guaranteed future value

 

[hj2k_x]

Guaranteed future value

Isn't that just a type of installment sale?

 

[SoTrue]

The only accurate way to choose between financing deals and even type of cars/models is to calculate the total cost of ownership that is applicable to your own conditions and preferences. Without such a calculation you are just guessing, which could lead to the wrong decision. But it is not an exact science, as you have to make assumptions (annual mileage, etc) that might work out differently in the future.

On a personal note, I buy my cars new and keep them for 12-15 years. I currently go for brands with proven reliability, such as Honda.

 

[Splinter]

You can get some really good deals on GFV, and these are guaranteed minimums, so you can often get more for the car. Usually there is a specific model being offered at a certain rate, as they need to get some units off the floor so if you aren't too fused about what you buy and shop smartly you can do really well in one of these deals.

That VW link you posted doesnt seem to work for me... Whats the monthly on the polo?

I see you are determined to be poor in the future..

 

[SauRoNZA]

The problem is that people don't lease for R3000 p/m when they would have bought for R5000 p/m.

They end up leading for R5000 p/m and get a bigger better car out of the deal for the same money.

Problem is they don't get the same value as they don't gain any form of ownership.

If realistically you do actually lease got half the money then sure it makes sense...but that pretty much never ever happens.

It's also about being happy to pay X about every month perpetually. Or not.

I haven't had a car installment in just about two years now. I'm not nearly bored enough with my car to justify pissing they couple of grand away which is currently going into my bike which also isn't being leased.

In two months time I sit with two paid for vehicles and when I decided to buy another the installment will be halved by the huge deposit (if I buy the same class vehicles of course) which I can choose to double and pay it off in half the time or leave as is and put the rest in my house still.

If I had been leasing now I would have nothing and would be paying a fortune for two vehicles every month while my house doesn't get paid off faster.

Like @splinter said above, it's a recipe to be poor. (While looking rich)

 

[phiber]

I see you are determined to be poor in the future..

I don't lease, but I disagree with your view. By leasing in these deals you can reduce your payments significantly, and if you're smart with what you save, you can put it to good use.

They give GFVs in these deals that are very often higher than the resale value could be in 2-3 years. If you're going to finance over 54 months and then sell after 3 years, you're probably only going to settle what you owe, meaning you leased at a higher rate.

Really depends how you view the car though, if you're planning to use it for 3 years and want the ability to walk away from it with no balloons etc attached, this is a good model.

 

[phiber]

The problem is that people don't lease for R3000 p/m when they would have bought for R5000 p/m.

They end up leading for R5000 p/m and get a bigger better car out of the deal for the same money.

Problem is they don't get the same value as they don't gain any form of ownership.

If realistically you do actually lease got half the money then sure it makes sense...but that pretty much never ever happens.

It's also about being happy to pay X about every month perpetually. Or not.

I haven't had a car installment in just about two years now. I'm not nearly bored enough with my car to justify pissing they couple of grand away which is currently going into my bike which also isn't being leased.

In two months time I sit with two paid for vehicles and when I decided to buy another the installment will be halved by the huge deposit (if I buy the same class vehicles of course) which I can choose to double and pay it off in half the time or leave as is and put the rest in my house still.

If I had been leasing now I would have nothing and would be paying a fortune for two vehicles every month while my house doesn't get paid off faster.

Like @splinter said above, it's a recipe to be poor. (While looking rich)

You make a big assumption here that drives your argument, but the point is if you lease the same car that you financed, your lease would be much less. That money could have gone to your homeloan immediately. So if we use your 3/5k example, if you are paying 5000pm currently, and were leased at 3000, you could have floated an extra 2k per month to your homeloan. Now I'm not saying in the specific example you would be better off if you leased, but again there is merit in leasing depending on how you buy and how you use the money you save.

 

[Splinter]

I don't lease, but I disagree with your view. By leasing in these deals you can reduce your payments significantly, and if you're smart with what you save, you can put it to good use.

They give GFVs in these deals that are very often higher than the resale value could be in 2-3 years. If you're going to finance over 54 months and then sell after 3 years, you're probably only going to settle what you owe, meaning you leased at a higher rate.

Really depends how you view the car though, if you're planning to use it for 3 years and want the ability to walk away from it with no balloons etc attached, this is a good model.

Sorry man, but I confused you with the OP

I used the methodology as indicated by Sauron - always paid off my car quicker than needed, always used it as a large deposit for next vehicle and paid that off new car quicker as well - basically then used extra cash to pay off bond, then used bond plus deposit from selling car to pay for next vehicle and so on.

Once you get ahead of that debt curve, you find you have a fair amount of extra cash to invest or buy toys...

 

[SauRoNZA]

You make a big assumption here that drives your argument, but the point is if you lease the same car that you financed, your lease would be much less. That money could have gone to your homeloan immediately. So if we use your 3/5k example, if you are paying 5000pm currently, and were leased at 3000, you could have floated an extra 2k per month to your homeloan. Now I'm not saying in the specific example you would be better off if you leased, but again there is merit in leasing depending on how you buy and how you use the money you save.

That's obviously what I said and is the ideal. My point was rather to illustrate why people see it as a bad deal.

One thing to bear in mind when leasing though is that is that if you find yourself suddenly unemployed you sit with a much bigger problem than someone who is buying to own...or even better had already done so with no need to buy a new one.

Your notion of wanting to replace every two-three years is already leaning towards qualifying the leasing option to yourself as a least cost option.

You could have had the same car purchased over five years instead of the same installment and then owned it.

The drive for new every so often is just as bad as the one of paying the same cost for a better specced leased car over a purchase one.

Going by your logic I would be paying R3k per month perpetually to lease (and increasing with every car).

3k X 120 months = R360 000 into cars and only R240 000 into my house.

5k X 54 months on my bought to own car = R270 000 into car.

5k X 66 months that I don't need to pay a car = R330 000 into my house.

Therefore the need to replace every three years and to use leasing to accomplish this does sort of come to the conclusion that you can't really afford the specific car and/or lifestyle in the first place.

Well you can obviously afford it, but you could do better otherwise.

*****

Obviously the 3k & 5k were never real numbers but I'm quite sure the above calculation will probably hold even more true with real numbers.

 

[silver6933]

PV of a lease vs PV of a installment agreement

PV of Lease is always higher. Else there is no profit in the company doing the lease.

In SA they obfuscate the matter with words.

You are paying to use an ITEM.

Why would you CHOOSE to pay more to use an ITEM?

Leasing or an installment sale is merely a financial vehicle to enable you to use an item.